TLDR
Early Bitcoin investor Frank Ahlgren III ordered by Texas court to surrender crypto wallet access worth $124M
Ahlgren bought 1,366 BTC in 2015, sold portions in 2017-2019, and used false purchase prices on tax returns
He used Bitcoin mixers and multiple wallets to hide transactions from the IRS
In September 2024, he received a 2-year prison sentence and $1M restitution order
Court restricted associates from moving his assets except for basic living expenses
A Texas court has ordered Frank Richard Ahlgren III to hand over access to his cryptocurrency wallets, marking a turning point in a complex tax evasion case. The ruling, issued in January 2025, requires Ahlgren to provide private keys, seed phrases, and all devices storing his digital assets.
Judge Robert Pitman’s order extends beyond Ahlgren himself. The court has barred his associates from moving or reducing the value of his crypto holdings without explicit court approval. The only exception allows for basic monthly living expenses.
Ahlgren’s journey in the cryptocurrency world began in 2011, but his legal troubles stem from activities starting in 2015. That year, he purchased approximately 1,366 Bitcoin through Coinbase when the cryptocurrency traded at around $495 per coin.
Two years later, in 2017, Ahlgren sold 640 Bitcoin for $3.7 million. He used most of this money to buy property in Park City, Utah. However, his tax returns for this period contained false information. He claimed purchase prices far above the actual market rates at the time of acquisition.
The pattern of tax evasion continued into the following years. During 2018 and 2019, Ahlgren conducted additional Bitcoin sales totaling over $650,000. These transactions never appeared on his tax returns.
To hide his activities from tax authorities, Ahlgren employed several methods to make his transactions harder to track. He moved funds through multiple digital wallets, used cash exchanges, and relied on Bitcoin mixers to obscure the movement of his cryptocurrency.
The consequences of these actions caught up with Ahlgren in September 2024. He pleaded guilty to the charges brought against him and received a two-year prison sentence. The court also ordered him to pay $1 million in restitution.
After completing his prison term, Ahlgren faces an additional year of supervised monitoring. This oversight period aims to ensure compliance with tax laws and prevent further financial misconduct.
Bill Hughes, an attorney working with blockchain firm Consensys, provided context for the case. He explained that while cryptocurrency users enjoy the freedom of self-custody, government authorities maintain the power to seize digital assets when tax laws are broken.
The Internal Revenue Service took a firm stance on the case. Lucy Tan, an Acting Special Agent with IRS Criminal Investigation, addressed the outcome directly. She pointed out that high cryptocurrency values often tempt investors to avoid paying taxes.
Tan emphasized that Ahlgren’s belief in the untraceable nature of his cryptocurrency transactions led to his downfall. The case proves that modern tax enforcement can track and prosecute digital currency tax evasion.
The court’s January 2025 order specifically targets Ahlgren’s remaining cryptocurrency holdings. It requires him to provide complete access to all digital wallets and any devices containing cryptocurrency.
The ruling shows the broad reach of tax enforcement in cryptocurrency cases. Even though Bitcoin operates on a decentralized network, courts can still compel holders to surrender access to their digital assets.
Law enforcement’s ability to track cryptocurrency transactions has improved greatly since Bitcoin’s early days. Tools and techniques now exist to follow digital money trails, even when users attempt to hide them.
The Texas court’s decision reinforces the IRS’s authority over cryptocurrency holdings. Despite the digital nature of the assets, traditional tax laws still apply to gains made through cryptocurrency trading.
Judge Pitman’s order includes strict controls on asset movement. While Ahlgren can access funds for basic living expenses, any other transfers require court approval. This restriction also applies to anyone acting on his behalf.
The post Texas Court Orders Bitcoin Investor to Disclose $124M Crypto Holdings appeared first on Blockonomi.
